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The ODFM: Everything You Need To Know

The recent May bank holiday in the UK sparked the lowest-ever electricity demand across the country. While low demand may sound easy to handle, there is a lot of work that goes on to ensure that the National Grid does not collapse. There needs to be a balance between generation and supply across the country.

 

In light of the bank holiday and the Coronavirus-induced fall in demand, the National Grid has put the ODFM or the Optional Downward Flexibility Management service in place.

 

What is ODFM?

 

The Optional Downward Flexibility Management is an opt-in service wherein small-scale generators of renewable electricity are paid by the National Grid Electricity System Operator (NGESO) in situations where they have to decrease or completely turn off their electricity generation. It is also for energy providers that can bring up the demand when required.

 

In the recent bank holiday period alone, a total of 4,829 MW of these ODFM instructions were sent by the system operator. Over the holiday weekend, 58% of the ODFM scheme was utilised. The highest capacity was used between 6 AM to 4:30 PM on Saturday, which stood at 73%.

 

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Based on the ODFM guidelines, the renewable generators need to have a minimum commitment of 1W and the capacity to deliver for three hours consecutively.

 

Using this scheme, the NGESO can access downward flexibility, something that is not present in real-time. On-the-fly downward flexibility can be controlled through means like the Platform for Ancillary Services and Balancing Mechanism. ODFM provides NGESO with the much-needed ability to control the output.

 

What is the need for ODFM?

 

The real-time balance of electricity demand and supply is maintained by NGESO. In periods of low demand, more flexibility is required for balancing generation and ensuring sufficient high-frequency response and negative reserve. Due to the Covid-19 induced lockdown, energy need is likely to stay low for a more extended period during the summer  months. Given these changing conditions, ODFM would be used during the summer season.

 

There are specific criteria that participants must meet for ODFM, apart from service sustainability. These conditions include:

 

> Capability of responding to email dispatches

> Service delivery by increased demand type or generation curtailment

> At least 1MW of generation reduction or demand increase capacity

> Assets that are not active in Balancing Mechanism or BM units

> Assets that are not part of any other flexibility balancing services

 

How sustainable is ODFM in the future?

 

Aaron Lally, head energy merchant for Kiwi Power, spoke about how ODFM may not be the ideal choice for sustainability. He said that even though it is a lucrative option for a few operators, it is not sustainable in the long run. According to him, the curtailing of renewables with an artificial demand increase is the exact opposite of what the National Grid’s long-term strategy should be.

 

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With the Covid-19 crisis, the system had seen a five-year push into the future. The lowered demand enabled the increased share of renewables in the generation of electricity. It consequently puts a significant expense on achieving flexibility.

 

In mid-May, there were extended periods of low demands and consumption. Balancing costs are estimated to go as high as £826.3 million during this time until September. It is £500 million higher than in the same period last year. According to Lally, it is an indicator of the aggressive changes required in the incentive regime over the coming years.

 

 

What are the options?

 

Several executives in the sector have been citing the current situation as a strong case for battery storage facilities. Lally says one of the methods is to include incentives for storing energy, similar to what is provided in cases of solar and wind power. He stated that a long-term contract guaranteeing minimum revenues for batteries would help acquire more storage. It would bring down the need to decrease renewables at a high cost.

 

Without significant investments in battery storage, the National Grid may not be able to meet its 2025 zero-carbon system target. Better balancing measures are a pressing need since low-demand is expected to continue in the foreseeable future.